[arin-ppml] Dynamics of a transfer environment without operational need assessment

Steven Ryerse SRyerse at eclipse-networks.com
Thu May 19 16:21:31 EDT 2016


I would add to Mike’s and your comments that needs based policies are probably having a different effect now that runout is here than they did before runout. That is why some of these policies need to be changed towards less needs based testing.

Steven Ryerse
President
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From: arin-ppml-bounces at arin.net [mailto:arin-ppml-bounces at arin.net] On Behalf Of John Curran
Sent: Thursday, May 19, 2016 3:28 PM
To: Mike Burns <mike at iptrading.com>
Cc: ARIN PPML <ppml at arin.net>
Subject: [arin-ppml] Dynamics of a transfer environment without operational need assessment

On May 19, 2016, at 8:52 PM, Mike Burns <mike at iptrading.com<mailto:mike at iptrading.com>> wrote:
...
I want community members to understand that this is evidence that the market is a natural conserver of valuable resources, and naturally elevates them to a higher and better use.

Mike -

There is little doubt that having an IP address transfer market has enabled unused or
otherwise “fallow” IP address blocks to come back to productive use.


Thus reducing the actual importance of these “angels-on-the-heads-of-pins” discussions about utilization periods or parsing the application of free pool allocation language in its application to transfers.

Given that all of our experience has been with needs-based transfer policies (which
provide some back pressure to speculation, whether via the direct prohibition that is
implied or the convolutions that is necessary to work around same), it is rather unclear
if financial speculation would have occurred over the past five years in absence of the
needs-based assessment model.   In an early message, you characterize it as such -

Policy in ARIN has been held hostage for years to the boogeyman of speculators capable of harmfully manipulating the market.  Never has evidence supporting the existence of these people been offered. And certain unavoidable facts are avoided:
1.       Any such speculation will drive IPv6 and could render IPv4 worthless
2.       Supply has been fragmented through a quarter century of worldwide RIR allocations
3.       Every policy-compliant transfer is publicly recorded
4.       Prices have not changed dramatically in five years of trading

These conditions make it all but impossible for any market manipulation to occur, because due to fragmentation, the acquisition of enough blocks to manipulate the market would take years, in my educated opinion, and would have to involve a very rich speculator who was willing to engage in a series of transfers under assumed names, with the speculated asset marching towards a zero value.  It’s ludicrous to believe that any such speculator exists, willing to risk not only the loss of his investments, but worldwide opprobrium.

While the circumstances you describe does inhibit speculation, it is unclear if it they
would still be latent in a transfer market environment which allowed and effectively
endorsed speculation.  For example, it is unclear if a short-term market squeeze in
IPv4 (e.g. 3 months) would materially impact deployment of IPv6 (which has many
other factors that businesses face in making such decisions.)  Similarly, we’ve seen
greatly accelerated recovery of unused IPv4 blocks since the IPv4 free pool runout
in the ARIN region in September 2015 (effectively describing fragmentation of the
marketplace over time) and absence of operational need could bring many more
actors into seeking underutilized IPv4 number resources blocks.  If the community
decides to make IPv4 address block rights transferable to any party, regardless of
operational need, then they are likely to be considered an investable asset class
and analyzed very differently by financial firms going forward.  Whether that would
be a good outcome (or not( is a matter of judgement regarding the functioning of
markets and resulting impact/benefit to this community.

In any case, the proposed policy 2015-3 does not directly touch on these merits
of needs-based transfers or otherwise, as it describes removal of a criteria whose
definition is unclear to operational need assessment for transfers (and thus not
operational today), and thus my reason for moving this more general discussion
of a transfer market without operational need-assessment to a separate thread
and subject.

Thanks!
/John

John Curran
President and CEO
ARIN




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